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Operating a worldwide business today requires effectively managing a network of third-party partners that offer product components, run operations in international markets, operate call centers, or act as outside consultants or agents.

The huge array of capabilities and specialized skill sets of a well-maintained third-party network makes operations simpler for both the organization and its customers. But many organizations, from small companies to multi-nationwide companies, can hardly ever afford the effort and time required in-house to manage these often complex third-party relationships.

Because of this, the risk of unethical business practices, bribery and different business corruption potentially increases if inadequate due diligence is carried out on third-party partners. The ramifications of a scandal related to a third-party partner can simply take down a corporation, resulting in such risks as a damaged fame and brand devaluation, to regulatory violations, authorized proceedings and doable fines and jail phrases for directors. The only way to totally protect the corporation’s assets, subsequently, is thru a robust and viable third-party risk management program.

Building a third-party risk administration program will not be a passive process. It requires time and effort on a continuing basis, as the risks associated with third-party partnerships constantly evolve.

Consider the events of this previous summer, throughout which the legislators of three separate nations signed new compliance laws and standards into law. Without a doubt, in case your group’s third-party risk management program is unable to quickly adjust to these new regulations (or shouldn’t be designed to anticipate future legislative movements) your organization is really at risk.

Cutting corners: not definitely worth the risk

Still, far too many organizations are willing to tempt fate by slicing corners on development and implementation of their third-party risk administration program. Certainly, building a powerful risk administration program requires a significant funding of time and resources (both internally and from the outside), however the consequences of not doing it proper may very well be dramatically severe.

One way organizations attempt to chop corners is by relying on outdated or stagnant instruments to monitor, detect and prevent risks. Virtually always, hiring outside business professionals with proven track records of profitable due diligence expertise is necessary.

Relying too heavily on “desktop” due diligence is one other dangerous shortcut. Desktop due diligence is a crucial initial step of the investigative process, involving background checks, lien searches, regulatory filing investigations and environmental reports. And while it is a vital element of any efficient due diligence program, it’s not nearly sufficient to thoroughly evaluate a third-party.

Actually understanding a potential partner’s enterprise requires a considerable amount of time spent face-to-face with the outside group’s leadership, operations management and even current customers. This “boots on the ground” process will detect potential risks which are sometimes hidden from a distance, and undetectable through web-primarily based discovery tools.

The “boots on the ground” approach also helps to determine a relational dynamic required for ongoing negotiations and provides clear insight into two of the fastest-growing issues in third-party risk management: bribery and labor management.

Bribery as a compliance issue

Anti-bribery and anti-corruption compliance is a fast-moving target. New anti-bribery laws and laws are being decreed around the globe at a relentless pace. Complicating matters additional, many countries could have laws in place but lack the ability to adequately enforce them. When this is the case, the responsibility falls to your group’s due diligence program to ensure detection and protection.

High profile investigations in recent years have contributed to the rapid emergence of bribery and corruption as a societal issue. By no means before has such a contrast been drawn so dramatically on a global stage between those who engage in bribery and people who undergo as a result. Any group that finds itself combined up in a scandal involving bribery has more than a authorized mess to contend with. It has an extended battle to win back the trust of its shareholders, staff, customers and the public.

Conducting adequate due diligence surrounded by such various factors is work that have to be carried out in person. Gaining perception into a potential partner’s firm culture requires a level of immersion with the group’s leadership, administration and staff. When it involves evaluating bribery risk, some warning signs can only be discovered on-site.

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